Can medical practitioners purchase neck braces, knee braces, and similar devices tax-exempt as 'for resale' when they provide them directly to patients as part of treatment?

Plain-English summary

Three affiliated pain-management practices — Brentwood Pain and Rehabilitation Services, Hempstead Pain and Medical Services, and South Bronx Pain and Medical Services — regularly give patients medical devices like neck braces, knee braces, and cervical collars during treatment. None of these devices require a prescription, though the practices write them anyway so insurance will reimburse patients. The devices are billed to insurance on a separate line from actual treatment supplies (ultrasound gel, headrest paper, etc.), and patients can exchange a wrong-size device. The practices asked whether they could buy these devices tax-exempt as purchases "for resale," since the same devices are available at any retail surgical-supply or drug store.

New York generally exempts drugs, medicines, and medical equipment/supplies from sales tax — but with a key carve-out: that exemption does NOT cover medical equipment "purchased at retail for use in performing medical and similar services for compensation." The Department found that's exactly what's happening here. The practitioners aren't running a separate retail medical-supply business — they only ever hand a device to a patient as part of that patient's paid treatment, as something the practitioner has determined the patient needs. Regardless of how the device is billed (bundled into the treatment charge or itemized separately to the insurer), it's still purchased "in conjunction with the performance of medical services for compensation." That disqualifies both the medical-equipment exemption and the resale exemption (since the practitioners aren't reselling the devices as a standalone retail transaction) — so their purchases of these devices are subject to sales tax.

The Department added a pointed caveat: it made no ruling on whether it's even legally permissible, under professional licensure rules, for a medical practice to also run a separate retail medical-supply operation from the same premises — that's a different question from the tax one.

What this means for you

Medical practitioners who provide braces, collars, or similar devices during treatment

If you supply these devices only as part of your paid treatment of the patient — not as a genuinely separate retail transaction the patient could decline and go buy elsewhere — you must pay sales tax when you purchase the devices. You cannot buy them tax-exempt as "for resale," even if you bill the device separately to the patient's insurer.

Practices considering an in-house retail medical-supply arrangement

This ruling doesn't decide whether operating a genuinely separate retail medical-supply storefront (distinct from providing devices as part of treatment) could change the tax analysis or whether it's even permissible under your professional licensure rules — that's a separate legal question requiring its own review.

Accountants and tax professionals

The controlling fact here is that the devices are "not provided to patients other than in conjunction with Petitioners' performance of medical services for compensation" — separate billing lines to the insurer don't change that. This is a useful contrast to genuine retail medical-supply sellers (drug stores, surgical supply shops), whose sales of the same items would qualify for the ordinary medical-equipment exemption because they aren't performing medical services for compensation.

Common questions

Q: Can a medical practitioner buy medical devices tax-exempt to give to patients?
A: Not if the devices are provided only as part of the practitioner's own paid medical treatment of the patient. That's treated as a purchase "for use in performing medical services for compensation," which is specifically excluded from the medical-equipment exemption.

Q: Does billing the device separately to the insurance company change the answer?
A: No. The Department said it doesn't matter whether the charge is separately shown on the patient's invoice or separately billed to the insurer — what matters is that the device is provided only in connection with the practitioner's paid services.

Q: Would a retail surgical-supply store selling the same device owe sales tax on its purchase?
A: No — a genuine retail seller isn't performing medical services for compensation, so its purchases of the same devices for resale to the public would qualify for the resale exemption or the ordinary medical-equipment exemption, unlike the practitioners here.

Q: Can another medical practice rely on this exact ruling?
A: No. This Advisory Opinion binds the Department only as to the three named petitioners and the facts they described. A practice with a genuinely separate retail sales arrangement (if legally permissible) could reach a different result.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)(i) (definition of retail sale)
• Tax Law § 1105(a) (imposition of sales tax on retail sales)
• Tax Law § 1115(a)(3) (drugs, medicines, and medical equipment exemption)
• 20 NYCRR 526.6 (resale exclusion)
• 20 NYCRR 528.4(a), (e), (h) (medical equipment exemption and for-compensation exclusion)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2007.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a07_19s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-07(19)S
Sales Tax
July 26, 2007

Office of Tax Policy Analysis
Taxpayer Guidance Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S050520A

On May 20, 2005, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Brentwood Pain and Rehabilitation Services, Hempstead Pain and
Medical Services, and South Bronx Pain and Medical Services, 468 Suffolk Avenue, Brentwood,
NY 11717. Petitioners, Brentwood Pain and Rehabilitation Services, Hempstead Pain and
Medical Services, and South Bronx Pain and Medical Services, provided additional information
pertaining to the Petition on November 27, 2006.
The issue raised by Petitioners is whether medical practitioners may purchase medical
equipment for resale.
Petitioners submitted the following facts as the basis for this Advisory Opinion.
Petitioners are medical practitioners who provide professional medical services to
patients. During the course of treatment, a medical practitioner will provide a patient a medical
device such as a neck brace, knee brace, or cervical collar. All of these devices are used to
alleviate a medical condition or reduce a patient’s discomfort. Quite often, the patient could
obtain the same medical device at a retail surgical supply store or a retail drug store. None of the
devices requires a prescription; however, prescriptions for the purchase of these items are
generally necessary to ensure that medical insurance companies will reimburse patients for
purchasing the items.
None of the items in question are used during either the medical practitioner’s
examination or subsequent treatment of the patient. All items in question are used by the patient
outside of the medical practitioners’ office to alleviate the medical condition. Approximately
95% of the time, the medical practitioner provides the medical equipment to the patient on the
initial visit following the practitioner’s evaluation of the patient.
Petitioners provide medical equipment directly to their patients in an effort to make it
easier for patients to get the precise medical equipment needed and to create additional revenue
for Petitioners. When Petitioners purchase this equipment, the items in question are billed to an
account separate from the items used by Petitioners in the course of treatment, such as ultrasound
gels, headrest paper, lotions, etc. The patient’s insurance company is charged separately for the
medical equipment provided to the patient and for the professional medical services provided.
The medical practitioner dispenses the medical equipment to the patient in a shopping
bag. If the medical equipment, such as braces or cervical collars, is the wrong size, the patient is
allowed to return the equipment to the medical practitioner for a different size device.

-2­
TSB-A-07(19)S
Sales Tax
July 26, 2007

Applicable law and regulations
Section 1101(b)(4)(i) of the Tax Law defines retail sale, in part, as follows:
A sale of tangible personal property to any person for any purpose, other than (A)
for resale as such. . . .
Section 1105(a) of the Tax Law imposes sales tax on “The receipts from every retail sale
of tangible personal property, except as otherwise provided in this article.”
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales imposed
under subdivision (a) of section eleven hundred five and the compensating use tax
imposed under section eleven hundred ten:
*

*

*

(3) Drugs and medicines intended for use, internally or externally, in the cure,
mitigation, treatment or prevention of illnesses or diseases in human beings, medical
equipment (including component parts thereof) and supplies required for such use or to
correct or alleviate physical incapacity, and products consumed by humans for the
preservation of health but not including cosmetics or toilet articles notwithstanding the
presence of medicinal ingredients therein or medical equipment (including component
parts thereof) and supplies, other than such drugs and medicines, purchased at retail for
use in performing medical and similar services for compensation.
Section 526.6 of the Sales and Use Tax Regulations provides, in part:
(a) The term retail sale or sale at retail means the sale of tangible personal
property to any person for any purpose, except as specifically excluded.
*

*

*

(c) Resale exclusion. (1) Where a person, in the course of his business operations,
purchases tangible personal property or services which he intends to sell, either in the
form in which purchased, or as a component part of other property or services, the
property or services which he has purchased will be considered as purchased for resale,
and therefore not subject to tax until he has transferred the property to his customer.
Section 528.4(a) of the Sales and Use Tax Regulations provides, in part:

-3­
TSB-A-07(19)S
Sales Tax
July 26, 2007

Exemption. (1) Drugs and medicines intended for the use, internally or externally
in the cure, mitigation, treatment or prevention of illnesses or diseases in human beings,
medical equipment (including component parts thereof) and supplies required for such
use or to correct or alleviate physical incapacity, and products consumed by humans for
the preservation of health are exempt.
*

*

*

(e) Medical equipment. (1) Medical equipment means machinery, apparatus and
other devices (other than prosthetic aids, hearing aids, eyeglasses and artificial devices
which qualify for exemption under section 1115(a) (4) of the Tax Law), which are
intended for use in the cure, mitigation, treatment or prevention of illnesses or diseases
or the correction or alleviation of physical incapacity in human beings.
(2) To qualify, such equipment must be primarily and customarily used for
medical purposes and not be generally useful in the absence of illness, injury or physical
incapacity.
*

*

*

(4) Medical equipment is not exempt if purchased by a person performing
medical or similar services for compensation. (See subdivision (g) of this section.)
*

*

*

(h) Taxable medical equipment and supplies. (1) Medical equipment and supplies
purchased for use in performing medical or similar services for compensation are not
exempt from tax.
*

*

*

(3) It is immaterial whether the compensation is paid to the practitioner or
institution by the patient or another source.
Opinion
Petitioners are medical practitioners who provide professional medical services to
patients. During the course of treatment, the medical practitioner may determine that a patient
needs a medical device, such as a neck brace, knee brace, or cervical collar. All of these devices
are used to alleviate a medical condition or reduce a patient’s discomfort. Petitioners state that
the devices in question are separately stated when charged to the patient’s insurance company
and are not used during the medical practitioner’s examination or treatment but are only used by
the patient outside the medical practitioner’s office.

-4­
TSB-A-07(19)S
Sales Tax
July 26, 2007

Purchases of medical equipment, other than for use in the performance of medical service
for compensation, are exempt from sales tax under section 1115(a)(3) of the Tax Law.
As part of their provision of medical services for compensation, Petitioners provide
patients with medical devices (neck braces, knee braces, cervical collars, etc.) that Petitioners
have determined to be useful or necessary to the patient for the patients’ treatment or
rehabilitation. Petitioners bill their patients for their services, and the charges for medical
devices are included in the bill for services as part of Petitioners’ cost of providing medical
service. Whether or not the charge is separately shown on the patient’s invoice, the charge for
such devices is separately billed to the patient’s insurance carrier. Regardless of how the
devices are billed to the patient or insurer, the facts submitted by Petitioners indicate that the
devices provided to Petitioners’ patients are purchased by Petitioners for use in performing
medical services for compensation and are not provided to patients other than in conjunction
with Petitioners’ performance of medical services for compensation for such patients.
Whether Petitioners, as persons engaged in the provision of medical services for
compensation, might operate a retail medical supply business offering medical devices for sale
from the same premises at which they perform medical services for compensation is subject to
the law and regulations regarding Petitioners’ professional licensure. This Opinion makes no
determination of the legality and viability of such an arrangement. However, the facts in this
Opinion do not indicate that Petitioners make any sales of medical equipment separate from the
provision of medical services to patients. Thus, Petitioners’ purchases of such medical
equipment provided to their patients in conjunction with the provision of medical services for
compensation are subject to sales tax under section 1105(a) of the Tax Law and do not qualify as
purchases made for resale as such.

DATED: July 26, 2007

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.